THE forestry market has seen a record-breaking year, with average values more than double what they were three years ago, according to a new report. 

Research shows a total of £200.40 million worth of properties was traded in 2021 as the price per stocked hectare rose from £16,000 in 2020 to £19,300, an increase of 21 per cent. 

The Tilhill and John Clegg & Co's UK Forest Market Report, published this week, also found 10,400ha (gross) of forestry was traded in 2021 (67 forests) compared with 12,500ha last year and the average size of property sold had decreased from 206 hectares (ha) to 155 ha. 

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Edward Daniels, head of forestry at John Clegg & Co, said: “2020 was an extraordinary 12 months in the forestry sector, but 2021 has more than matched it.

"Timber prices have remained high, plantation values are breaking new records and large institutional investors such as pension funds and other new entrants are allocating more capital to sustainable investments than ever before.

“Forests are seen as critical to growing the UK’s low carbon economy, which is why, alongside ESG and natural capital factors, companies and funds are so keen to invest.

"While there are those who would argue that rising values are a result of short-term supply and demand dynamics, it is our belief that the underlying worth of commercial forests is increasing because of the positive long-term outlook for timber prices, carbon income and other ecosystem services payments.

"The signs are extremely positive for the woodland and forestry sector with further growth in forestry values a real possibility.” 

Peter Chappell, head of forestry investment, Tilhill said: “It is an exciting time to be in the forestry sector.

"The positive long-term outlook for timber values has buoyed confidence in how commercial forests can perform as an investment and the wider benefits of trees and woodland to society and the environment are being increasingly recognised.

"The growth in the value of an average stocked hectare has continued unabated, rising 21% this year. This means over the past three years, values have risen from £9,300 in 2018 to £19,300 in 2021.

“The report also highlights how the trend of younger forests achieving the highest unit values has continued into 2021.

"This shows investor confidence in timber values, and the fact that younger, second-rotation forests tend to be characterised by high yielding, improved varieties of Sitka spruce, with proven timber extraction and a developed infrastructure.

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"There is also some evidence that larger forests over 100ha are now attracting the highest per hectare values as an increasingly competitive market develops for high value deals.”

The UK Forest Market Report has been produced since 1988 and the data series now covers 23 years, incorporating 1,909 transactions which total some £1.6 billion and 299,000 stocked hectares (ha).

Read full details in The UK Forest Market Report 2021 here.